Some of the cash is earmarked for expanding the company’s infrastructure. Today’s fundraising will help Locad develop further, Robertz expects. But most of the cost is variable, with merchants paying fees per item stored in the warehouse, and per order fulfilled. The company’s business model is partly based on the software-as-a-service concept, with ecommerce merchants paying a monthly subscription fee for access to the Locad platform. It also commits to service level agreements promising better fulfillment performance than most brands would be able to target in-house. To reassure on this front, Locad points to the transparency its software offers, with merchants able to track what’s going on with their customers’ orders in real time. Merchants are handing over responsibility for fulfillment to a third party – if Locad lets them down, customers will blame the ecommerce brand they bought through, not the infrastructure provider they know little about. The potential downside to this arrangement, on the other hand, is loss of control.
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